Secondary Direct Transactions
Sale of a Portfolio of Direct Minority Investments

At times, investors may need or want to divest a portfolios of direct investments in privately held companies, for various reasons.

One may want to divest non-strategic investments, focus time and resources on new investments, generate liquidity, etc.

Secondary Direct Transactions are by essence complex, as they most often involve rights of first refusal, tag-alongs, drag-alongs, several layers of liquidation preferences, convertible bond issues, and shareholder loans, resulting in a complex capital structure.

In case of venture investments, the difficulty is increased by portfolio companies' likely lack of visibility in terms of revenue, EBITDA and exit.

There is a small number of qualified potential buyers capable of executing such transactions in a given vertical space, leading to a wide range in valuation and pricing.

At the same time, the complexity of each transaction implies a high cost for a potential buyer to enter the process and value the portfolio.

RainMakers has demonstrated its expertise by successfully completing several secondary direct transactions including portfolios of venture-backed companies.